Flat Hots Co. v. Peschke Packing Co.

• Decision Date: 06 April 1942
• Docket Number: No. 35.,35.
• Citation: 3 N.W.2d 295,301 Mich. 331
• Parties: FLAT HOTS CO., Inc., v. PESCHKE PACKING CO.
• Court: Michigan Supreme Court

301 Mich. 331

3 N.W.2d 295

FLAT HOTS CO., Inc.,

v.PESCHKE PACKING CO.

No. 35.

Supreme Court of Michigan.

April 6, 1942.

Action by Flat Hots Company, Inc., against the Peschke Packing Company to recover damages for alleged breach of contract by defendant to buy or pay for at an agreed price, a minimum quantity of patented sausage casings. From an adverse judgment, the plaintiff appeals.

Judgment affirmed.

Appeal from Circuit Court, Wayne County; Robert M. Toms, judge.

Before the Entire Bench, except WIEST, J.

Wiley, Streeter & Ford, of Detroit, for appellant.

H. S. Derderian and Miller, Bevan, Horwitz & Des Roches, all of Detroit, for appellee.

BOYLES, Justice.

Flat Hots Company, Inc., brought suit against Peschke Packing Company, a Michigan corporation, claiming damages for breach of a written contract to buy, or pay for at an agreed price, a minimum quantity of certain patented sausage casings. Plaintiff claimed that defendant had breached a written undertaking to create a market for ‘flat hots' manufactured by a certain type of grill which plaintiff furnished defendant under license, and that defendant thereby deprived plaintiff of profits it would have received from the sale of an agreed quantity of casings. The declaration added the usual common counts. Defendant denied that any contract existed between the parties, claimed that defendant's treasurer had no authority to sign the alleged written contract, that it was understood and agreed by plaintiff that the consent of Mr. Peschke, the president of defendant corporation, was essential to a binding contract; that defendant's use of the grills and its efforts to sell flat hots were merely a preliminary test of market possibilities for the use of the process. Defendant denied any liability whatever.

The issues were tried by the court without a jury, the circuit judge found that the defendant never became legally bound by the alleged contract, and entered judgment of no cause for action. Plaintiff reviews by general appeal.

The only question before us is whether the defendant corporation's treasurer had authority to bind the corporation by signing the alleged contract on which plaintiff relies, and, if not, was the contract binding on defendant corporation by implied agency or by estoppel.

For the purposes of this case, the plaintiff corporation may be considered as consisting of Walter T. Schuett and Herbert C. McConnell. Before the corporation was organized, the contract in question was entered into by these two individuals as copartners doing business under the name of Flat Hots Company. They later organized plaintiff corporation under the same name and assigned the contract to the corporation. The alleged contract on which plaintiff relies purports to have been signed as follows:

‘Walter T. Schuett,

‘Herbert C. McConnell,

‘Copartners Doing Business as Flat Hots Company.

‘Peschke Packing Company,

‘By ________

‘President.

‘By Shirley J. Georgi,

‘Treasurer.’

The circumstances under which it was signed were somewhat unusual. In The latter part of August, 1938, some conversations were held between Schuett, McConnell and Shirley Georgi with reference to the possibility of the Peschke company entering into a contract to acquire the exclusive right to sell and distribute in Michigan a patented sausage known as flat hots. These conversations led to the drafting of a written agreement by an attorney representing the plaintiff partners. A meeting was held in the office of the Flat Hots Company, at which those present were Messrs. Schuett and McConnell and their attorney, Shirley Georgi and his father, John Georgi, an attorney representing defendant, and one or two others. Shirley Georgi testified that he stated at this meeting that any contract must bear Mr. Peschke's signature before it became valid, and that the reason that plaintiffs gave for wanting his (Georgi's) signature was to show his good faith and to show that it was all right with him if it was all right with Mr. Peschke. McConnell testified that he heard no statement made by Mr. Georgi to that effect. John Georgi testified that it was there stated that the contract would have to be sent to Mr. Peschke, who was then traveling in Europe, for his signature. Defendant's attorney, who was at this meeting, testified that he told plaintiffs that the president's and secretary's signatures would be required to bind the defendant company and that Mr. Schuett suggested that when Mr. Peschke's signature had been procured, the partners would exchange agreements and give the defendant an agreement signed by Schuett and McConnell; that Schuett and McConnell said they would withhold their signatures until defendant could furnish them an agreement properly signed by Mr. Peschke. Plaintiffs' attorney, who was at the meeting, testified that no statement was made that any contract must be signed by Mr. Peschke to be valid and that Shirley Georgi stated that he had the authority to sign the contract. About the only facts not in dispute are that Shirley Georgi did at some time sign one copy of the alleged contract, as treasurer, which copy was retained by plaintiffs, that plaintiffs did not sign and deliver any copy but left three unsigned copies with the defendant's attorney.

It is undisputed that Georgi, as treasurer of the defendant corporation, had no express authority to execute the contract either under the corporation's bylaws or by any action of defendant's board of directors. The trial court, sitting without jury, found: ‘It must appear plain that the plaintiffs had actual knowledge of the necessity for some signature other than Georgi's on behalf of the defendant, before the contract became effective. If Mr. McCauley, plaintiff's attorney who drew the contract, was convinced that it became a binding obligation upon its execution by Georgi, it is difficult to understand why he planned to have it executed further by mailing it to Mr. Peschke for his signature, or having a resolution of the board of directors adopting it. Further circumstances at the time Georgi signed the instrument indicate conclusively to the court that McConnell knew that the instrument was not binding without further signatures. His conduct is utterly inconsistent with a conclusion that without further execution on behalf of the defendant...